TIDMIPX
RNS Number : 3547H
Impax Asset Management Group plc
03 December 2020
Impax Asset Management Group plc
Results for the year ended 30 September 2020
London 3 December 2020 - Impax Asset Management Group plc
("Impax" or the "Company"), the specialist investor focused on the
transition to a more sustainable global economy, today announces
final audited results for the year ending 30 September 2020 (the
"Period").
Business highlights
-- Assets under management ("AUM") increased 34% to GBP20.2 billion (2019: GBP15.1 billion)
-- Net inflows of GBP3.5 billion (2019: GBP1.4 billion)
-- Major investment strategies have continued to outperform global and regional markets
-- Net inflows of over GBP1.9 billion in the first two months of
the new financial year contributed to AUM rising to GBP23.4 billion
by 30 November
Financial highlights
-- Revenue increased 19% to GBP87.5 million (2019: GBP73.7 million)
-- Adjusted operating profit grew by 29% to GBP23.3 million (2019: GBP18.0 million)
-- Profit before tax of GBP16.7 million (2019: GBP18.9 million)
-- Shareholders' equity increased 13% to GBP71.5 million (2019: GBP63.2 million)
-- Proposed final dividend of 6.8 pence per share (2019: 4.0
pence) which together with the interim dividend of 1.8 pence per
share (2019: 1.5 pence) gives a total for the year of 8.6 pence per
share (2019: 5.5 pence), up 56%.
-- Cash reserves of GBP37.4 million (2019: GBP26.2 million)
Keith Falconer, Chairman, commented:
"Impax has proven highly resilient throughout the COVID-19
crisis to deliver outstanding success. Over the Period we expanded
our headcount by 12% and I am also very pleased that the functional
integration of the New Hampshire-based Pax World Management
business, which Impax acquired in January 2018, is largely
complete. Furthermore, we signed an updated distribution agreement
with BNP Paribas Asset Management that cements our long-term
relationship with this important partner."
Ian Simm, Chief Executive, added:
"I would like to thank all my colleagues who have worked
extremely hard and effectively to deliver Impax's excellent set of
results, marked by multiple industry awards and significant growth
across key performance indicators.
"Over the 12 months to 30 September 2020, our AUM increased by
34% to GBP20.2 billion and has expanded further in the first two
months of the new financial year, reaching GBP23.4bn on 30 November
2020. Year-on-year, our revenue was up 19%, driven by annual net
inflows of GBP3.5 billion into the funds and accounts that we
manage (up from GBP1.4 billion in the prior year). We have
sustained strong investment performance across major investment
strategies and currently have a solid pipeline of potential new
business.
"Impax's investment thesis is based on our belief that companies
that are benefiting from the transition to a more sustainable
economy should, on average, out-perform their peers in other
markets. Over the past 12 months we have seen further evidence
supporting this view. There are strong reasons to believe that
governments, investors and consumers are seeking to steer capital
towards markets that offer inherent resilience to environmental and
social problems."
Enquiries:
Impax Asset Management Group plc
Ian Simm, Chief Executive +44 (0)20 7434 1122 (switchboard)
Paul French, Corporate Communications Director
Montfort Communications
Gay Collins +44(0)77 9862 6282
Louis Supple +44(0)77 3943 0102
impax@montfort.london
Peel Hunt LLP, Nominated Adviser
James Britton or Rishi Shah +44 (0)20 7418 8900
LEI number: 213800AJDNW4S2B7E680
CHAIRMAN'S INTRODUCTION
COVID-19 has affected all our lives. During what has been a very
difficult time for businesses around the world, the Board has been
impressed that Impax has not only proven highly resilient
throughout the crisis but has gone beyond just "business as usual"
to deliver outstanding success. On behalf of my fellow Directors, I
would like to pay tribute to the management team for leading the
further expansion of the Company and to all our staff for their
continued commitment and diligence while working away from the
office.
During the 12 months to 30 September 2020 (the "Period"),
Impax's assets under management and advice ("AUM") grew by 34% to
GBP20.2 billion. Investment performance has been strong across all
our major strategies. These results are reflected in the many
prestigious industry awards that Impax won last year.
Over the Period we expanded our headcount by 18 (12%) to ensure
we had sufficient resources in investment management, client
service and in each of the support teams. I am also very pleased
that the functional integration of the business in New Hampshire,
which Impax acquired in January 2018, is largely complete.
Furthermore, we signed an updated distribution agreement with BNP
Paribas Asset Management that cements our long-term relationship
with this important partner.
In addition to highlighting the Company's successful growth in
AUM and profitability I would also like to draw attention to a
number of important non-financial developments, as you would expect
from an investment manager which focuses beyond the short-term
financial results. Achieving our vision and business goals requires
a culture where Impax colleagues can deliver their best, adapt and
learn continuously, and stay ahead in an increasingly competitive
arena. To this end, the senior management team has refreshed our
objectives in the management of talent and has introduced a
structured programme of leadership training.
We have also made good progress in the area of equality,
diversity and inclusion, in particular with the formation of a
Company-wide group to coordinate our initiatives in this area;
Lindsey Brace Martinez regularly attends the meetings of this group
as the Board sponsor of this work. We remain focused on increasing
the number of women in our business, especially at senior levels,
which over time will continue to reduce the senior management
gender pay gap.
We also continue to make strides with our sustainability
initiatives, including a new commitment to retain our "net carbon
positive" status across our operations and corporate
investments.
These important developments and our strong long-term investment
performance have been recognised and applauded by the investment
industry again this year. In addition to the numerous awards we
have won, I congratulate Ian Simm on his recognition from Financial
News as "Industry Leader of the Year (male)".
Keith Falconer
2 December 2020
CHIEF EXECUTIVE'S REPORT
I am pleased to report that Impax has had an outstanding year.
During the 12 months ending 30 September 2020 (the "Period"), the
Company's assets under discretionary and advisory management
("AUM") increased by 34% to GBP20.2 billion, which included GBP3.5
billion of net inflows into the funds and accounts that we manage.
By 30 November 2020, AUM had reached GBP23.4 billion.
Impax has remained fully operational since the start of the
pandemic. We have focused on protecting the health and safety of
our colleagues, while continuing to provide a seamless service to
clients and fulfilling obligations to our shareholders and other
stakeholders. We have sustained strong investment performance while
we have also been able to expand our operations and team in line
with the needs of the business.
Highly attractive investment opportunities
Government policies around the world continue to support our
investment thesis, and this year we have witnessed more debate than
ever before on what a sustainable economy will look like.
Impax's investment thesis is based on our belief that companies
that are benefiting from the transition to a more sustainable
economy should, on average, out-perform their peers in other
markets. Over the past 12 months we have seen further evidence
supporting this view.
While global health care and related social issues have
dominated the policy and media agendas in recent months, the impact
of climate change has never been more keenly felt. This year has
seen the worst wildfires in US history, and summer in the northern
hemisphere has been the hottest since records began, with the
coverage of Arctic sea-ice reaching another historical low. The
impacts of climate change have been largely in line with scientific
models, but the human and social cost appears to be much greater
than expected.
Against this backdrop, there are many compelling reasons for
optimism, with large flows of private capital into
climate-mitigating technologies and business models, shareholder
activism against the worst polluters, rapidly rising consumer
interest, and ever more robust environmental regulation.
Investment performance
The listed equity strategies managed by our London-centred team
have performed well. The two largest strategies, Water and Leaders,
posted increases of 9.6% and 14.8% respectively for the Period,
against their global comparator index, the MSCI All Country World
("ACWI") which returned 5.3%. The Specialists strategy, which is
the basis for our UK investment trust, Impax Environmental Markets
plc, returned 13.9%, and in March, this trust joined the FTSE 250
index.
The Asia-Pacific strategy was the standout performer with
returns of 19.3% reflecting the strong recovery in most regional
stock markets, while our fastest-growing strategy, Global
Opportunities, returned 12.9%, outperforming the ACWI by 7.6%. The
Sustainable Food strategy, which has a relatively defensive
investment approach, returned 3.3%, 2% below ACWI but outperforming
its specialist benchmark by 5.6%.
Performance from the Pax World Funds managed by our US-based
team has improved considerably, with more than half of the funds
significantly outperforming their benchmarks, and three funds
ranked in the top decile of their respective peer groups. This fund
range has had positive net inflows of over USD380 million over the
Period, with allocations focused on the Pax Global Environmental
Markets Fund, Pax Global Women's Leadership Fund and the Pax Large
Cap fund.
Real Assets
Our team investing in markets linked to renewable power
generation made good progress in investing our third fund, Impax
New Energy Investors III ("NEF III"), committing additional capital
in Norway, France and Germany and making its first commitments in
Spain. We expect this fund to be fully invested by the end of 2021
and are advancing our plans to raise additional capital in this
area.
Client Service and Business Development
Impax experienced another year of strong net inflows from
investors around the world.
This year our business development in the UK has been
particularly successful. The Global Opportunities mandate that we
manage on behalf of St James's Place recorded net inflows of GBP877
million, while our Irish UCITS fund range received GBP269 million
on a net basis. In Continental Europe total net inflows were GBP1.1
billion, with contributions from direct sales to institutional
investors and from our distribution partners, particularly
Formuepleje in Denmark, ASN Bank in the Netherlands, and BNP
Paribas Asset Management ("BNPP") across multiple countries in the
region.
In November 2020, we announced that BNPP had executed its plan
to reduce its holding in the Company from c.24.5% to c.14.0%,
having seen a very positive return on their original investment
made in 2007. BNPP remains Impax's largest shareholder and a key
distribution partner. The relationship was cemented with a new
distribution agreement on very similar terms to the Memorandum of
Understanding covering distribution that has been in place since
2007.
Although the pandemic delayed some institutional mandate
searches, we expect these to catch up in 2021. Our North American
business had another strong year, with positive net inflows of USD
778 million. We are seeing an increasing number of buy
recommendations from investment consultants and are continuing to
build our relationships with leading asset owners in the US. We
also extended our work in Canada, with new sub-advisory mandates
for NEI Investments and Desjardins.
Beyond investment returns
In addition to the pursuit of excellent investment returns, we
focus on four broader areas. First, our corporate engagement aims
to enhance our understanding of investment risk. In 2019 we engaged
with over 100 companies, or close to half of all those in which we
invest.
Second, as pioneers in the calibration of the positive
environmental impact of our investments, we have issued our sixth
annual Impact Report which covers listed equities and also
describes how we have applied our methodology to the fixed income
portfolios that we manage.
Third, we have strengthened our connections to the environmental
science community with the aim of augmenting our work on climate
risk and, more recently, biodiversity. In October we published a
white paper on physical climate risk and have also become a core
member of the Coalition for Climate Resilient Investment and joined
efforts to set up a new Task Force on Nature-related Financial
Disclosures.
And finally, this year we also have expanded our specialist
policy team in order to deepen our policy insights as well as our
contributions to the development of effective future laws and
regulations. Over the year, we have joined a number of
organisations and initiatives, including the Confederation of
British Industry's Energy & Climate Change Board, the Climate
Financial Risk Forum and the Energy Transitions Commission.
Developing Impax's talent
We have continued to recruit through the pandemic, and our team
now comprises 175 individuals, an increase in headcount of 12%
since the start of the Period.
As our volume of business has grown, we have also taken several
important steps to expand and strengthen our HR operations and
talent management systems. This has included refreshing our
objectives to ensure that our colleagues can thrive in their
current roles and also look forward to attractive career prospects.
This year we have focused on developing the leadership skills of
our managers, mapping out plans to enhance equality, diversity and
inclusion, and, in these challenging times, are devoting particular
attention to supporting our colleagues' well-being and mental
health.
We have accelerated the integration of our New Hampshire-based
team, who joined us in 2018 following the acquisition of Pax World
Management LLC. We have now completed the formation of global teams
in several areas, including actively managed listed equities,
trading, finance, compliance and HR, and have undertaken additional
integration projects in marketing and the definition of a common
corporate culture.
Awards and industry recognition
In April Impax was honoured to receive the Queen's Award for
Enterprise in the Sustainable Development category for a second
time. This represents a significant endorsement of the team's hard
work over the past two decades in encouraging companies to improve
their sustainability as well as supporting the growth of pioneering
new sustainable businesses.
The Company's expertise has also been acknowledged through
numerous prestigious industry awards again this year. These include
the Global Investor Investment Excellence awards 2020 (Boutique
Manager of the year), FT Pensions Expert PIPA Awards (highly
commended in the ESG/SRI Manager of the Year category) and Impax
was named one of the Corporate Knights' "Green 50 Top Business
Moves for the Planet" list. Furthermore, after Period end we were
proud to announce three further award wins: "Ambition Nation Listed
50" award (from Finncap), "Boutique of the Year - Equities" from
Financial News, and "European Specialist Investment Firm of the
Year" from Funds Europe.
In the United States Pax World Funds was recognised by Bloomberg
and the United Nations as one of "50 Climate Leaders" and Ethical
Corporation assigned a coveted "Highly Commended" designation to
the Pax Ellevate Global Women's Leadership Fund. Joe Keefe,
President, was acknowledged as one of the "10 leaders of ESG and
Impact Investing" in the US by Investment News and Impax joined the
"Best Companies to Work for in New Hampshire" Hall of Fame.
For the seventh consecutive year, Impax has been awarded A+ and
A scores across all applicable categories in the UN-backed
Principles for Responsible Investment (PRI) assessment report of
Environmental, Social and Governance (ESG) integration efforts.
Finally, in November 2020, Morningstar described Impax as a
"Leader" for its ESG Commitment, one of only six asset managers
globally to be awarded the highest grade.
Brexit
Given the political uncertainties and the current perceived lack
of provision for financial services, we are planning for our Dublin
office to be fully operational in December 2020. We only expect to
transfer a small number of clients, representing less than 2% of
current AUM. The required associated activities, including some
limited recruitment, are advancing in line with our plans.
Outlook
Since the late 1990s Impax has argued that many of those
companies that are tackling the environmental problems arising from
human activity are set to out-perform their peers in other sectors.
More recently, we have extended our analysis and argued that the
transition to a more sustainable global economy is accelerating,
and that companies whose business models address social issues are
providing additional investment opportunities.
We also consider the recent result of the US election to be
positive for the markets in which Impax invests. In addition to his
commitment to bring the US back into the Paris Climate agreement,
President-elect Biden appears determined to address the profound
sustainability challenges facing the country, including a climate
plan to invest $2 trillion over four years with targeted
zero-emissions power generation by 2035 and a net-zero economy by
2050. Investors are also hopeful that the Democrats will improve
ESG integration and disclosure.
This year the effects of COVID-19 have amplified many of the
issues associated with investing in the transition to a more
sustainable economy, but recent events have also reinforced our
investment case. There are strong reasons to believe that
governments, investors and consumers are seeking to steer capital
towards markets that offer inherent resilience to environmental and
social problems.
Nevertheless, the contours of the post pandemic landscape are
not yet clear and the timing of the economic recovery remains
uncertain. Corporate balance sheets have been severely impacted,
some dividends cancelled or reduced, and we can expect to see many
more companies looking to raise capital. Until the roadmap out of
the pandemic becomes clearer, we are likely to see considerable
volatility across financial markets.
We continue to invest in order to grow the Company and are well
positioned for further expansion that should enhance value for all
our stakeholders.
Ian Simm
2 December 2020
FINANCIAL REVIEW
I am pleased to report very strong financial results and strong
growth for all our financial KPIs.
As in previous periods, in order to facilitate comparison of
performance with past periods, and to provide an appropriate
comparison with our peers, the Board encourages shareholders to
focus on financial measures after adjustment for accounting charges
or credits arising from the acquisition accounting for Impax NH,
and adjustments arising from the accounting treatment of National
Insurance costs on share-based payment awards.
Financial highlights for financial year 2020 versus financial
year 2019
2020 2019
--------------------------- ------------ -------------
AUM(1) GBP20.2bn GBP15.1bn
============ =============
Revenue GBP87.5m GBP73.7m
============ =============
Adjusted operating profit GBP23.3m GBP18.0m
============ =============
Adjusted profit before tax GBP22.2m GBP18.1m
============ =============
Adjusted diluted earnings
per share 14.5p 11.5p
============ =============
Cash reserves GBP37.4m GBP26.2m
============ =============
Seed investments GBP4.3m GBP4.6m
============ =============
Dividend per share 1.8p interim 1.5p interim
+6.8p final + 4.0p final
============ =============
2020 2019
-------------------------- -------- --------
IFRS operating profit GBP17.6m GBP18.8m
======== ========
IFRS profit before tax GBP16.7m GBP18.9m
======== ========
IFRS diluted earnings per
share 10.5p 12.1p
======== ========
Revenue
Revenue for the Period grew by GBP13.8 million to GBP87.5
million (2019: GBP73.7 million). Growth was driven by continued
strong net inflows across the business and robust performance,
offset to some extent by the market falls seen in February and
March.
Our run-rate revenue at the end of the Period was GBP96.5
million (2019: GBP78.3 million), giving a weighted average run rate
revenue margin of 48 basis points (2019: 52 basis points) on the
GBP20.2 billion of AUM.
Operating costs
Adjusted operating costs increased to GBP64.3 million (2019:
GBP55.7 million), mainly reflecting planned increases in headcount
and higher profit-related pay due to the rising profitability. We
continue to invest selectively in the business to take advantage of
strong growth opportunities so we expect that there will be some
cost increases in the near term.
IFRS operating costs include additional charges and credits,
principally the amortisation of intangible assets arising on the
Impax NH acquisition, National Insurance charges on share options
and restricted shares and in 2019 a credit for the release of a
contingent consideration provision related to the NH acquisition.
Employer's National Insurance is payable based on the share price
when an option is exercised or restricted shares vest and
accordingly the charge has increased significantly as our share
price has risen over the year. This is offset by a tax credit which
is recorded in equity.
Profits
Adjusted operating profit increased to GBP23.3 million (2019:
GBP18.0 million), driven by the revenue growth described above.
Run-rate adjusted operating profits at the end of the Period grew
further to GBP28.3 million (2019: GBP20.5 million), in line with
business expansion. IFRS operating profit in 2020 fell to GBP17.6
million (2019: GBP18.8 million), as 2019 benefited from the credit
for the release of contingent consideration described above. Fair
value gains and losses and other financial income partially offset
interest expense and finance costs to give adjusted profit before
tax of GBP22.2 million (2019: GBP18.1 million).
Tax
Tax rates were lower than last year as the Group benefited from
a GBP1.0 million credit in relation to taxation of the prior years'
private equity income.
Earnings per Share
Adjusted diluted earnings per share grew to 14.5 pence (2019:
11.5 pence) as a result of the growth in profits. IFRS diluted
earnings per share however fell to 10.5 pence (2019: 12.1 pence) as
2019 benefited from the contingent consideration credit described
above.
Financial management
At the Period end the Company held GBP37.4 million of cash
reserves, an increase of GBP11.2 million on 2019. The Company had
no debt (2019: no debt) but retains access to a US$13 million
revolving facility (the "RCF") (LIBOR plus 3.3%), which was put in
place at the time of the acquisition of Impax NH.
The Company continues to make seed investments and to invest in
its private equity funds. These investments were valued at GBP4.3
million at the Period end. During the Period we redeemed GBP2.0
million by exiting the seed investment in our successful US mutual
fund which is managed under the Global Opportunities strategy. The
cash realised is planned to be re-invested after the year end into
a segregated account investing in our new Asian Opportunities
Strategy. We also invested GBP0.8 million into our third private
equity fund.
We adopted the new accounting standard IFRS 16 which covers
accounting for leases during the Period. This has required us to
recognise new assets, representing the leases on our office
buildings, and a corresponding lease liability.
Share management
The Board intends that the Company will continue to purchase its
own shares from time to time after due consideration of attractive
alternatives for the use of the Company's cash resources. Shares
purchased may be used to satisfy obligations linked to share
incentive awards for employees. Share purchases are usually made by
funding the Company's Employee Benefit Trusts ("EBTs") which will
then settle option exercises or hold shares for Restricted Share
awards until they vest.
During the Period, the EBTs spent GBP4.2 million buying 1.3
million of the Company's shares at an average price of 332 pence.
At the Period end, the EBTs held a total of 5.2 million shares, 4.8
million of which were held for Restricted Shares leaving up to 0.4
million shares available for option exercises and future share
incentive awards. Net options outstanding at the Period end were
2.5 million of which 0.1 million were exercisable.
The Company did not issue any shares in the Period. Equity
issuance may arise in respect of staff option exercises or
restricted share awards that have not been previously matched by
share purchase into the EBTs, and in January 2021, conversion at
the Company's discretion into Impax shares of Impax NH management's
remaining 16.7% interest in Impax NH.
Dividends
The Company paid an interim dividend of 1.8 pence per share in
July 2020. Last year we announced a new policy of paying, in normal
circumstances, an annual dividend within a range of 55% and 80% of
adjusted profit after tax. Despite the unforeseen challenges of
COVID-19, Impax has reported strong growth in revenue and profits
and is in robust financial health. The Board is therefore
recommending a final dividend of 6.8 pence. This would be an
increase in the total dividend for the year of 3.1 pence or 56%,
while still being at the lower end of our stated range.
This dividend proposal will be submitted for formal approval by
shareholders at the Annual General Meeting on 18 March 2021. If
approved, the dividend will be paid on, or around, 26 March 2021.
The record date for the payment of the proposed dividend will be 19
February 2021 and the ex-dividend date will be 18 February
2021.
The Company operates a dividend reinvestment plan ("DRIP"). The
final date for receipt of elections under the DRIP will be 5 March
2021. For further information and to register and elect for this
facility, please visit www.signalshares.com and search for
information related to the Company.
Going concern
The Financial Reporting Council requires all companies to
perform a rigorous assessment of all the factors affecting the
business when deciding to adopt a "going concern" basis for the
preparation of the accounts.
The Board has made an assessment covering a period of at least
12 months from the date of approval of this report which indicates
that, taking account of a reasonably possible downside in relation
to asset inflows, market performance and costs, the Group will have
sufficient funds, to meet its liabilities as they fall due for that
period. In making this assessment the Board has considered the
potential evolving impacts of COVID-19. The Group has appropriate
cash balances and no debt and, at the Period end market levels, is
profitable. A significant part of the Group's cost basis is profit
related pay. The Group can also preserve cash through dividend
reduction and through issuance of shares to cover share option
exercises/restricted share awards (rather than purchasing shares).
The Group has operated without disruption during the lockdown
periods to date and expects to continue to do so. Consequently, the
Directors are confident that the Group will have sufficient funds
to continue to meet its liabilities as they fall due for at least
12 months from the date of approval of the financial statements and
therefore have prepared the financial statements on a going concern
basis.
Charlie Ridge
2 December 2020
Consolidated Income Statement
For the year ended 30 September 2020
2020 2019
GBP000 GBP000
-------------------------------------------------- -------- --------
Revenue 87,511 73,695
Operating costs (69,928) (54,883)
Finance income 1,020 1,055
Finance expense (1,921) (1,125)
Non-controlling interest - 156
--------------------------------------------------- -------- --------
Profit before taxation 16,682 18,898
Taxation (2,944) (3,028)
--------------------------------------------------- -------- --------
Profit after taxation 13,738 15,870
--------------------------------------------------- -------- --------
Earnings per share
Basic 10.6p 12.2p
Diluted 10.5p 12.1p
--------------------------------------------------- -------- --------
Dividends per share
-------------------------------------------------- -------- --------
Interim dividend paid and final dividend declared
for the year 8.6p 5.5p
--------------------------------------------------- -------- --------
Adjusted results are provided in note 4.
Consolidated Statement of Comprehensive Income
For the year ended 30 September 2020
2020 2019
GBP000 GBP000
-------------------------------------------------------- ------- -------
Profit for the year 13,738 15,870
Change in value of cash flow hedges (70) (12)
Tax on change in value of cash flow hedges 13 2
Exchange differences on translation of foreign
operations (487) 922
--------------------------------------------------------- ------- -------
Total other comprehensive income (544) 912
--------------------------------------------------------- ------- -------
Total comprehensive income for the year attributable to
equity holders of the Parent 13,194 16,782
--------------------------------------------------------- ------- -------
All amounts in other comprehensive income may be reclassified to
income in the future.
The statement has been prepared on the basis that all operations
are continuing operations.
Consolidated Statement of Financial Position
As at 30 September 2020
2020 2019
---------------------------------------- --------------- --------------
GBP000 GBP000 GBP000 GBP000
---------------------------------------- ------ ------- ------ ------
Assets
Goodwill 12,306 12,804
Intangible assets 20,871 24,518
Property, plant and equipment 10,857 1,779
Deferred tax assets 5,492 3,757
----------------------------------------- ------ ------- ------ ------
Total non-current assets 49,526 42,858
Trade and other receivables 20,735 16,740
Investments 4,387 4,626
Current tax asset 224 239
Cash invested in money market funds and
long-term deposit accounts 18,516 15,235
Cash and cash equivalents 20,245 11,939
----------------------------------------- ------ ------- ------ ------
Total current assets 64,107 48,779
----------------------------------------- ------ ------- ------ ------
Total assets 113,633 91,637
----------------------------------------- ------ ------- ------ ------
Equity and liabilities
Ordinary shares 1,304 1,304
Share premium 9,291 9,291
Exchange translation reserve 1,449 1,936
Hedging reserve (111) (54)
Retained earnings 59,515 50,751
----------------------------------------- ------ ------- ------ ------
Total equity 71,448 63,228
Trade and other payables 27,984 23,581
Lease liabilities 1,410 -
Current tax liability 190 124
----------------------------------------- ------ ------- ------ ------
Total current liabilities 29,584 23,705
Trade and other payables - 704
Lease liabilities 9,261 -
Deferred tax liability 3,340 4,000
----------------------------------------- ------ ------- ------ ------
Total non-current liabilities 12,601 4,704
Total equity and liabilities 113,633 91,637
----------------------------------------- ------ ------- ------ ------
Consolidated Statement of Changes in Equity
For the year ended 30 September 2020
Exchange
translation
Share capital Share premium reserve Hedging reserve Retained earnings Total Equity
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
----------------- ------------- ------------- ---------------- --------------- ----------------- ------------
1 October 2018 1,304 9,291 1,014 (44) 41,054 52,619
Transactions with
owners of the
Company:
Dividends paid - - - - (5,792) (5,792)
Acquisition of own
shares - - - - (2,505) (2,505)
Cash received on
option exercises - - - - 111 111
Tax credit on
long-term
incentive schemes - - - - 251 251
Share-based
payment charges - - - - 1,160 1,160
Fair value of put
option over
non-controlling
interest - - - - (328) (328)
Acquisition of NCI
without a change
in control - - - - 930 930
------------------ ------------- ------------- ---------------- --------------- ----------------- ------------
Total transactions
with owners of
the Company - - - - (6,173) (6,173)
Profit for the
year - - - - 15,870 15,870
Other
comprehensive
income:
Change in value of
cashflow hedges - - - (12) - (12)
Tax on change in
value of cashflow
hedges - - - 2 - 2
Exchange
differences on
translation of
foreign
operations - - 922 - - 922
------------------ ------------- ------------- ---------------- --------------- ----------------- ------------
Total other
comprehensive
Income - - 922 (10) 912
------------------ ------------- ------------- ---------------- --------------- ----------------- ------------
30 September 2019 1,304 9,291 1,936 (54) 50,751 63,228
------------------ ------------- ------------- ---------------- --------------- ----------------- ------------
Impact of adoption
of IFRS 16 - - - - (247) (247)
------------------ ------------- ------------- ---------------- --------------- ----------------- ------------
Adjusted balance
at 1 October 2019 1,304 9,291 1,936 (54) 50,504 62,981
Transactions with
owners of the
Company:
Dividends paid - - - - (7,442) (7,442)
Acquisition of own
shares - - - - (4,223) (4,223)
Cash received on
option exercises - - - - 489 489
Tax credit on
long-term
incentive schemes - - - - 4,636 4,636
Share-based
payment charges - - - - 1,813 1,813
------------------ ------------- ------------- ---------------- --------------- ----------------- ------------
Total transactions
with owners of
the Company - - - - (4,727) (4,727)
Profit for the
year - - - - 13,738 13,738
Other
comprehensive
income:
Change in value of
cash flow hedge - - - (70) - (70)
Tax on change in
value of cashflow
hedges - - - 13 - 13
Exchange
differences on
translation of
foreign
operations - - (487) - - (487)
------------------ ------------- ------------- ---------------- --------------- ----------------- ------------
Total other
comprehensive
Income - - (487) (57) - (544)
------------------ ------------- ------------- ---------------- --------------- ----------------- ------------
30 September 2020 1,304 9,291 1,449 (111) 59,515 71,448
------------------ ------------- ------------- ---------------- --------------- ----------------- ------------
Consolidated Cash Flow Statement
For the year ended 30 September 2020
2020 2019
GBP000 GBP000
----------------------------------------------------- -------- --------
Operating activities
Cash generated from operations 24,382 20,848
Corporation tax paid (607) (580)
------------------------------------------------------ -------- --------
Net cash generated from operating activities 23,775 20,268
------------------------------------------------------ -------- --------
Investing activities
Deconsolidation of investment fund - (67)
Net acquisitions of property plant and equipment
and intangible assets (182) (402)
Net redemptions/investments from/into unconsolidated
Impax funds 1,191 (485)
Settlement of investment related hedges (156) 258
Investment income received 222 236
Increase in cash held in money market funds and
long-term deposit accounts (3,281) (4,024)
------------------------------------------------------ -------- --------
Net cash used by investing activities (2,206) (4,484)
------------------------------------------------------ -------- --------
Financing activities
Acquisition of non-controlling interest (201) (201)
Repayment of bank borrowings - (10,371)
Interest paid on bank borrowings (136) (670)
Payment of lease liabilities (1,699) -
Acquisition of own shares (4,223) (2,505)
Cash received on exercise of Impax staff share
options 489 111
Dividends paid (7,442) (5,792)
------------------------------------------------------ -------- --------
Net cash used by financing activities (13,212) (19,428)
------------------------------------------------------ -------- --------
Net increase/(decrease) in cash and cash equivalents 8,357 (3,644)
Cash and cash equivalents at beginning of year 11,939 15,529
Effect of foreign exchange rate changes (51) 54
------------------------------------------------------ -------- --------
Cash and cash equivalents at end of year 20,245 11,939
------------------------------------------------------ -------- --------
Cash and cash equivalents under IFRS does not include deposits
in money market funds and cash held in deposits with more than an
original maturity of three months. The Group however considers its
total cash reserves to include these amounts. Cash held in RPA
accounts are not included in cash reserves.
Movements on cash reserves are shown in the table below:
At the
beginning At the
of the Foreign end of
year Cashflow exchange the year
GBP000 GBP000 GBP000 GBP000
---------------------------------------- ---------- -------- --------- ---------
Cash and cash equivalents 11,939 8,357 (51) 20,245
Cash invested in money market funds and
long-term deposit accounts 15,235 3,281 - 18,516
Cash in RPAs (968) (395) - (1,363)
---------------------------------------- ---------- -------- --------- ---------
Total Group cash reserves 26,206 11,243 (51) 37,398
---------------------------------------- ---------- -------- --------- ---------
NOTES TO THE FINANCIAL STATEMENTS
1 REPORTING ENTITY
Impax Asset Management Group plc (the "Company") is incorporated
and domiciled in the UK and is listed on the Alternative Investment
Market ("AIM"). These consolidated financial statements comprise
the Company and its subsidiaries (together referred to as the
"Group").
2 BASIS OF PREPARATION
These financial statements have been prepared in accordance with
International Financial Reporting Standards ("IFRSs") adopted for
use by the European Union.
The financial statements have been prepared under the historical
cost convention, with the exception of the revaluation of certain
investments and derivatives being measured at fair value.
The financial statements are presented in Sterling. All amounts
have been rounded to the nearest thousand unless otherwise
indicated.
Going concern
The Board has made an assessment covering a period of 12 months
from the date of approval of these financial statements which
indicates that, taking account of a reasonably possible downside
assumptions in relation to asset inflows, market performance and
costs, the Group will have sufficient funds to meet its liabilities
as they fall due and regulatory capital requirements for that
period. In making this assessment the Board has considered the
potential ongoing impact of Covid-19. The Group has sufficient cash
balances and no debt and, at the year- end market levels, is
profitable. A significant part of the Group's cost basis is
variable as bonuses are linked to profitability. The Group can also
preserve cash through dividend reduction and through issuance of
shares to cover share option exercises/restricted share awards
(rather than purchasing shares). The Group has operated without
disruption during the lockdown periods to date and expects to
continue to do so. Consequently, the Directors are confident that
the Group will have sufficient funds to continue to meet its
liabilities as they fall due for at least 12 months from the date
of approval of the financial statements and therefore have prepared
the financial statements on a going concern basis.
3 USE OF JUDGEMENTS AND ESTIMATES
In preparing these financial statements management has made
estimates that affect the reported amounts of assets, liabilities,
income and expenses. Actual results may differ from estimates.
Revisions to estimates are recognised prospectively.
The significant key source of estimation uncertainty were
estimates made in determining if intangible assets, acquired on
acquisition of NH were impaired. The intangible assets acquired
represent investment management contracts. These are amortised over
an 11 year life which is considered reasonable given the nature of
the investors into these Funds. If there are any indications of
impairment they are tested for impairment at each reporting date.
The fair value at the date of acquisition was calculated using the
discounted cash flow methodology and represented the valuation of
the profits expected to be earned from the management contracts in
place at the date of acquisition. The impairment test completed
this year showed no impairment was required and used the following
key assumptions - future subscription of new assets of US$0.34bn
per annum on average (2019: USD$0.34bn), future equity fund
performance of 5 per cent (2019: 5 per cent), an average operating
margin of 20 per cent (2019: 23 per cent) and a discounted cost of
capital of 13.5 per cent (2019: 13.5 per cent).
Changes in the assumptions would give rise to impairments as
follows: a consistent ten per cent decrease in inflows - no
impairment; a 100 basis point annual reduction in performance each
year - impairment of GBP0.4 million; a one per cent annual
reduction in operating margin - no impairment.
4 ADJUSTED PROFITS AND EARNINGS
The reported operating earnings, profit before tax and earnings
per share are substantially affected by business combination
effects and other items. The Directors have therefore decided to
report an Adjusted operating profit, Adjusted profit before tax and
Adjusted earnings per share which exclude these items in order to
enable comparison with peers and provide consistent measures of
performance over time. A reconciliation of the adjusted amounts to
the IFRS reported amounts is shown below.
Year ended 30 September 2020
-------------------------------------------- -----------------------------------------
Adjustments
-------- --------------------- --------
Business
Reported combination
- IFRS effects Other Adjusted
GBP000 GBP000 GBP000 GBP000
-------------------------------------------- -------- ------------ ------- --------
Revenue 87,511 87,511
Operating costs (69,928) (64,261)
Amortisation of intangibles arising on
acquisition 2,535
Acquisition equity incentive scheme charges 135
Mark to market charge on equity awards* 2,997
-------------------------------------------- -------- ------------ ------- --------
Operating profit 17,583 2,670 2,997 23,250
Finance income 1,020 (124) 896
Finance expense (1,921) (1,921)
-------------------------------------------- -------- ------------ ------- --------
Profit before taxation 16,682 2,670 2,873 22,225
Taxation (2,944) (3,490)
Tax credit on adjustments (546)
-------------------------------------------- -------- ------------ ------- --------
Profit after taxation 13,738 2,670 2,327 18,735
-------------------------------------------- -------- ------------ ------- --------
Diluted earnings per share 10.5p 2.1p 1.8p 14.5p
-------------------------------------------- -------- ------------ ------- --------
* The charge is mitigated by GBP4,636,000 of tax credits shown
in the statement of changes in equity
Year ended 30 September 2019
----------------------------------------------- -----------------------------------------
Adjustments
-------- --------------------- --------
Business
Reported combination
- IFRS effects Other Adjusted
GBP000 GBP000 GBP000 GBP000
----------------------------------------------- -------- ------------ ------- --------
Revenue 73,695 73,695
Operating costs (54,883) (55,717)
Amortisation of intangibles arising on
acquisition 2,528
Credit from contingent consideration
adjustment (3,543)
Acquisition equity incentive scheme charges (21)
Mark to market charge on equity awards 202
----------------------------------------------- -------- ------------ ------- --------
Operating profit 18,812 (1,036) 202 17,978
Finance income 1,055 (154) 901
Finance expense (1,125) 209 (916)
Non-controlling interest 156 156
Change in third-party interest in consolidated
funds - -
----------------------------------------------- -------- ------------ ------- --------
Profit before taxation 18,898 (827) 48 18,119
Taxation (3,028) (3,037)
Tax credit on adjustments (9)
Profit after taxation 15,870 (827) 39 15,082
----------------------------------------------- -------- ------------ ------- --------
Diluted earnings per share 12.1p (0.6p) 0.0p 11.5p
----------------------------------------------- -------- ------------ ------- --------
The adjusted diluted earnings per share is calculated using the
adjusted profit after taxation shown above less the IFRS adjustment
for profit attributable to owners of restricted shares of
GBP503,000 (2019: GBP867,000). The diluted number of shares is the
same as used for the IFRS calculation of earnings per share.
Mark to market charge on equity incentive awards
The Group has in prior years and the current period awarded
employees options over the Group's shares, some of which are either
unvested or unexercised at the balance sheet date. The Group has
also made awards of restricted shares ("RSS awards") some of which
have not vested at the balance sheet date. Employers National
Insurance Contributions ("NIC") are payable on the option awards
when they are exercised and on the RSS awards when they vest, based
on the valuation of the underlying shares at that point. The Group
does however receive a corporation tax credit equal to the value of
the awards at the date they are exercised (options) or vest (RSS
awards). A charge is accrued for the NIC within IFRS operating
profit based on the share price at the balance sheet date.
Similarly, a credit for the corporation tax is accrued within
equity.
An additional retention payment is made to holders of legacy
Long-Term Incentive Plan ("LTIP") awards when they are exercised,
all of which are fully vested at the balance sheet date. The
payment will be equal to the corporation tax benefit the Group
receives on the exercise of the options minus the amount of NIC
payable on exercise. For unexercised options this charge is accrued
based on the share price at the balance sheet date.
These two charges vary based on the Group's share price
(together referred to as mark to market charge on equity incentive
schemes) and are not linked to the operating performance of the
Group. They are therefore eliminated when reporting adjusted
profit.
Contingent consideration
We are required to review and adjust our estimate of the
contingent consideration payable in respect of the Impax NH
acquisition. Any adjustment is recorded through income but is
excluded from adjusted profit. This is not linked to the operating
performance of the Impax NH business and is therefore eliminated
from operating costs.
Amortisation of intangibles
Intangible management contracts were acquired as part of the
acquisition of Impax NH acquisition and are amortised over their 11
year life. This is not linked to the operating performance of the
Impax NH business and is therefore eliminated from operating
costs.
Finance income/expense
The adjustments represent the removal of charges in respect of
unwinding the discount of the contingent consideration payable (see
above) and of legacy royalty income.
5 SEGMENTAL REPORTING
(a) Operating segments
In January 2018, Pax World Management LLC was acquired by Impax
and has been re-named Impax Asset Management LLC. This company is
based in Portsmouth, New Hampshire and we refer to it as "Impax
NH". Impax NH is the manager of Pax World Funds. Impax Asset
Management Ltd and Impax Asset Management (AIFM) Ltd manage or
advise listed equity funds and accounts, and the Real Assets
division. The majority of this business is based in London so we
refer to it as "Impax LN". Impax LN itself has two operating
segments: "Listed Equity" and "Private Equity". The results of
these segments have been aggregated into a single reportable
segment for the purposes of these financial statements because they
have characteristics so similar that they can be expected to have
essentially the same future prospects. These segments have common
investors, operate under the same regulatory regimes and their
distribution channels are substantially the same. Additionally
management allocates the resources of Impax LN as though there is
one operating unit.
Segment information is presented on the same basis as that
provided for internal reporting purposes to the Group's chief
operating decision maker, the Chief Executive.
Year ended 30 September 2020
Impax LN Impax NH Adjustments Total
GBP000 GBP000 GBP000 GBP000
------------------------------------------- -------- -------- ----------- -------
Revenue
External customers 61,906 25,605 - 87,511
Inter-segment 3,147 - (3,147) -
------------------------------------------- -------- -------- ----------- -------
Total revenue 65,053 25,605 (3,147) 87,511
------------------------------------------- -------- -------- ----------- -------
Segment profit - adjusted operating profit 22,176 1,074 - 23,250
------------------------------------------- -------- -------- ----------- -------
Year ended 30 September 2019
Impax LN Impax NH Adjustments Total
GBP000 GBP000 GBP000 GBP000
Revenue
External customers 50,030 23,665 - 73,695
Inter-segment 2,349 - (2,349) -
------------------------------------------- -------- -------- ----------- -------
Total revenue 52,379 23,665 (2,349) 73,695
------------------------------------------- -------- -------- ----------- -------
Segment profit - adjusted operating profit 16,630 1,348 - 17,978
------------------------------------------- -------- -------- ----------- -------
(b) Geographical analysis
An analysis of revenue by the location of client is presented
below:
Revenue
----------------
2020 2019
GBP000 GBP000
-------------- ------- -------
UK 15,104 13,221
North America 34,705 30,007
France 9,478 8,523
Luxembourg 19,066 14,580
Netherlands 2,912 3,087
Ireland 3,553 2,478
Other 2,693 1,799
-------------- ------- -------
87,511 73,695
-------------- ------- -------
6 OPERATING COSTS
The Group's largest operating cost is staff costs. Other
significant costs include direct fund costs, premises costs
(depreciation of office building lease right of use assets, rates
and service charge), amortisation of intangible assets, mark to
market charges on share awards and acquisition costs.
2020 2019
GBP000 GBP000
--------------------------------------- ------- -------
Staff costs (note 7) 44,728 36,657
Direct fund expenses 5,570 5,488
Premises costs 1,062 2,496
Research costs 570 322
Professional fees 2,555 2,596
IT and communications 4,017 3,458
Depreciation and amortisation 4,260 2,952
Mark to market charges on share awards 3,243 202
Other costs 3,923 4,255
--------------------------------------- ------- -------
Sub-total 69,928 58,426
--------------------------------------- ------- -------
Contingent Consideration - (3,543)
--------------------------------------- ------- -------
Total 69,928 54,883
--------------------------------------- ------- -------
Operating costs include GBP774,000 (2019: GBP791,000) in respect
of placing agent fees paid to related parties.
7 STAFF COSTS AND EMPLOYEES
Staff costs include salaries, a variable bonus, social security
cost (principally UK Employers' National Insurance on salary, bonus
and share awards), the cost of contributions made to employees'
pension schemes and share-based payment charges. Further details of
the Group's remuneration policies, including how the total variable
bonus pool is determined, are provided in the Remuneration Report.
Share-based payment charges are offset against the total cash bonus
pool paid to employees. NIC charges on share-based payments are
accrued based on the share price at the balance sheet date or at
the date of exercise.
2020 2019
GBP000 GBP000
---------------------------------------- ------- -------
Salaries and variable bonuses 34,081 29,290
Social security costs 3,702 1,661
Pensions 948 834
Share-based payment charge (see note 8) 1,813 1,160
Other staff costs 4,184 3,712
---------------------------------------- ------- -------
44,728 36,657
---------------------------------------- ------- -------
Employees
The average number of persons (excluding Non-Executive Directors
and including temporary staff), employed during the year was 171
(2019: 151).
2020 2019
No. No.
---------------------------------------- ---- ----
Listed Equity 57 55
Private Equity 12 11
Client Service and Business Development 53 43
Group 49 42
---------------------------------------- ---- ----
171 151
---------------------------------------- ---- ----
8 SHARE-BASED PAYMENT CHARGES
The total expense recognised for the year arising from
share-based payment transactions was GBP1,813,000 (2019:
GBP1,160,000). The charges arose in respect of the Group's
Restricted Share Scheme ("RSS"), the Group's Employee Share Option
Plan ("ESOP") and the Group's Restricted Share Units scheme ("RSU")
which are described below. Share-based payment charges also arose
in respect of the put and call arrangement made with Impax NH
management to acquire their shares in Impax NH. Details of all
outstanding options are provided at the end of this note. The
charges for each scheme are:
2020 2019
GBP000 GBP000
------------------------- ------- -------
RSS 1,253 1,099
ESOP 426 123
RSU - (41)
Put and call arrangement 134 (21)
------------------------- ------- -------
1,813 1,160
------------------------- ------- -------
Restricted Share Scheme
Restricted shares have been granted to employees in prior years
under the 2014, 2015, 2017, 2018 and 2019 plans which are not
wholly vested. Post year end the Board approved the grant of a
further 331,500 restricted shares under the 2020 plan. Details of
the awards granted along with their valuation and the inputs used
in the valuation are described in the table below. The valuations
were determined using the Black-Scholes-Merton model with an
adjustment to reflect dividends received by employees during the
vesting period. Following grant, the shares are held by a nominee
for employees - who are then immediately entitled to receive
dividends. After a period of three years' continuous employment the
employees will receive unfettered access to one third of the
shares, after four years a further third and after five years the
final third. The employees are not required to make any payment for
the shares on grant or when the restrictions lapse.
2014 RSS 2015 RSS 2017 RSS 2018 RSS 2019 RSS 2020 RSS
-------------------------------- --------- ----------- -------------- ---------- ---------- ----------
2,550,000/
3,140,000/ 500,000/
Awards originally granted 1,250,000 1,000,000 675,000 478,250 67,250 331,500
In respect of services provided 1 Oct 1 Oct 2014/ 14 Dec 2016/ 1 Oct 2017 1 Oct 2018 1 Oct 2019
for period from 2013 9 Feb 2016 11 May 2017/
1 Oct 2016
42.1p/ 52.2p/87.7p/
Option award value 49.9p 41.5p 161.6p 201.3p 236.8p 506.2p
Weighted average share price
on grant 52.5p 41.4p 77.4p 202.8p 239.0p 510.0p
Expected volatility 32% 32%/31% 29%/29%/29% 30% 31% 32%
Weighted average option life 5.3yrs 4.9yrs 4.3yrs 5.3yrs 5.3yrs 5.3yrs
on grant
Expected dividend rate 3% 3% 4%/2%/2% 1% 2% 1%
Risk free interest rate 1.2% 1.2%/0.8% 0.6%/0.6%/0.7% 1.2% 0.3% 0.0%
-------------------------------- --------- ----------- -------------- ---------- ---------- ----------
The expected volatility was determined by reviewing the
historical volatility of the Company and that of comparator
companies. The expected dividend rate is determined using the
Company share price and most recent full year dividend to grant
date.
Restricted shares outstanding
--------------------------------- -----------
Outstanding at 1 October 2019 7,185,479
Granted during the year 67,250
Vested during the year (2,480,007)
Forfeited during the year (25,000)
--------------------------------- -----------
Outstanding at 30 September 2020 4,747,722
--------------------------------- -----------
Employee share option plan
Options granted between 2014 and 2017
The strike price of these options was set at a 10 per cent
premium to the average market price of the Company's shares for the
five business days (ESOP 2014: 30 days) following the announcement
of the results for each of the respective preceding financial
years. The 2014 - 2015 ESOP options have vested. The 2017 options
do not have performance conditions but do have a time vesting
condition such that they vest subject to continued employment on 31
December 2020.
The valuation was determined using the Black-Scholes-Merton
model.
Options granted in 2018 and 2019
The strike price of these options was set at GBP1. The options
do not have performance conditions but do have a time vesting
condition such that the options vest subject to continued
employment five years following grant. Vested shares are restricted
from being sold until after a further five year period (other than
to settle any resulting tax liability).
Post year end the Board approved the grant of 610,000 options
under the 2020 plan. The options have a strike price of GBP3 but
otherwise have the same conditions as the other options.
The valuation was determined using the binomial model.
Share options are equity settled.
Options outstanding
An analysis of the outstanding options arising from Company's
ESOP and LTIP plans is provided below:
Weighted
average exercise
Number price p
----------------------------------------- ----------- -----------------
Options outstanding at 1 October 2019 4,525,500 74.4
Options granted 650,000 100.0
Forfeited during the year (100,000) 100.0
Options exercised (2,625,500) 18.0
Options outstanding at 30 September 2020 2,450,000 140.7
Options exercisable at 30 September 2020 100,000 53.6
----------------------------------------- ----------- -----------------
Exercise prices for the options outstanding at the end of the
period were 56.9p for the ESOP 2014, 180.2p for the ESOP 2017 and
100.0p for the ESOP 2018 and 2019. The weighted average remaining
contractual life was 5.5 years.
The Group continues to plan that future options exercises will
primarily be satisfied by the Group's Employee Benefit Trusts (the
"EBT"). The Group funds the EBT to acquire shares or issues shares
to the EBT to cover the grant of RSS awards and option
exercises.
Restricted stock units
The Group awarded Restricted Stock Units ("RSUs") to Impax NH
staff and management on 18 January 2018. The RSUs entitle holders
to receive Impax shares with a total value equal to 10 per cent of
the Contingent Consideration paid for the Impax NH acquisition. The
number of shares that each individual will receive under the RSUs
is determined on 15 January 2021 after the amount of Contingent
Consideration payable is finalised using the average Impax share
price for the 20 consecutive trading days ending 15 January 2021.
There is a further two-year restriction on the holders' ability to
sell the shares. The shares are forfeited if the individual leaves
at any time before the restricted period ends.
The charge to the income statement for these awards is
determined each year by estimating the total value of shares that
will be awarded (using the estimate of Contingent consideration)
and spreading this over the five year period until the restrictions
cease. The estimates are updated each year and the charge adjusted
accordingly.
Based on the current estimate of Contingent Consideration no
shares will be issued.
Impax NH put and call arrangement
The Group has a put and call arrangement which will require it
to purchase shares held in Impax NH by its management. The shares
held by Impax NH management were originally acquired as part of a
share-based payment arrangement and are subject to certain
restrictions. The original share-based payment agreement and the
put and call arrangement together represent a new share-based
payment. The charge is spread over a three year period from the
date of acquisition.
9 FINANCE INCOME
2020 2019
GBP000 GBP000
------------------------ ------- -------
Fair value gains 798 103
Interest income 98 82
Other investment income 124 154
Foreign exchange gains - 716
------------------------ ------- -------
1,020 1,055
------------------------ ------- -------
Fair value gains represent those arising on the revaluation of
listed and unlisted investments held by the Group and any gains or
losses arising on related hedge instruments held by the Group.
The fair value gain comprises realised losses of GBP53,000 and
unrealised gains of GBP851,000 (2019: GBP149,000 of realised losses
and GBP252,000 of unrealised gains).
10 FINANCE EXPENSE
2020 2019
GBP000 GBP000
-------------------------------------------------- ------- -------
Interest on lease liabilities 514 -
Finance costs on bank loans 295 912
Unwinding of discount on contingent consideration - 213
Foreign exchange losses 1,112 -
-------------------------------------------------- ------- -------
1,921 1,125
-------------------------------------------------- ------- -------
Finance costs on bank loans for 2020 mainly represent commitment
fees payable on the Group's revolving credit facility.
11 TAXATION
The Group is subject to taxation in the countries in which it
operates (the UK, the US and Hong Kong) at the rates applicable in
those countries. The total tax charge includes taxes payable for
the reporting period (current tax) and also charges relating to
taxes that will be payable in future years due to income or
expenses being recognised in different periods for tax and
accounting periods (deferred tax).
(a) Analysis of charge for the year
2020 2019
GBP000 GBP000
------------------------------------- ------- -------
Current tax expense:
UK corporation tax 124 831
Foreign taxes 219 227
Adjustment in respect of prior years 342 185
------------------------------------- ------- -------
Total current tax 685 1,243
------------------------------------- ------- -------
Deferred tax expense/(credit):
Charge for the year 3,388 2,165
Adjustment in respect of prior years (1,129) (380)
------------------------------------- ------- -------
Total deferred tax 2,259 1,785
------------------------------------- ------- -------
Total income tax expense 2,944 3,028
------------------------------------- ------- -------
Tax credits are also recorded in equity in respect of tax
deduction on share awards arising due to share prices increases of
GBP4,636,000 (2019: GBP251,000) and tax credits on cash flow hedges
of GBP13,000. This includes a credit of GBP175,000 to reflect the
cancellation of the planned reduction in the UK tax from 19 per
cent to 17 per cent that was due to come in to effect from 1 April
2020. The adjustment in respect of prior years in 2020 mainly
reflects reductions in the tax expected to be payable on private
equity income, recorded in prior years, as result of transactions
which took place in the year.
(b) Factors affecting the tax charge for the year
The UK tax rate for the year is 19 per cent. The tax assessment
for the period is lower than this rate (2019: lower). The
differences are explained below:
2020 2019
GBP000 GBP000
--------------------------------------------------------- ------- -------
Profit before tax 16,682 18,898
--------------------------------------------------------- ------- -------
Tax charge at 19% (2019: 19%) 3,170 3,591
Effects of:
Non-taxable income - contingent consideration adjustment - (863)
Non-deductible expense and charges 13 20
Adjustment in respect of historical tax charges (787) (195)
Effect of higher tax rates in foreign jurisdictions 85 95
Tax losses not recognised 463 380
--------------------------------------------------------- ------- -------
Total income tax expense 2,944 3,028
--------------------------------------------------------- ------- -------
The Group has tax losses of GBP4,467,000 available for offset
against future taxable profits in the USA which have not been
recognised as deferred tax assets on the basis that, based on
current profitability of the USA business we will not be able to
utilise them in the next 2 years.
(c) Deferred tax
The deferred tax asset/(liability) included in the consolidated
statement of financial position is as follows:
Share-based Income
payment not yet
scheme Other assets Total assets taxable Other liabilities Total liabilities
GBP000 GBP000 GBP000 GBP000 GBP000 GBP000
----------------------------- ----------- ------------ ------------ -------- ----------------- -----------------
As at 1 October 2018 3,613 837 4,450 (2,851) (313) (3,164)
Credit to equity 251 2 253 - - -
Exchange differences on
consolidation - 2 2 1 - 1
Credit/(charge) to the income
statement (345) (603) (948) (983) 146 (837)
----------------------------- ----------- ------------ ------------ -------- ----------------- -----------------
As at 30 September 2019 3,519 238 3,757 (3,833) (167) (4,000)
Credit to equity 4,636 13 4,649 - - -
Exchange differences on
consolidation - - - 6 - 6
Credit/(charge) to the income
statement (2,953) 40 (2,913) 697 (43) 654
----------------------------- ----------- ------------ ------------ -------- ----------------- -----------------
As at 30 September 2020 5,202 291 5,492 (3,130) (210) (3,340)
----------------------------- ----------- ------------ ------------ -------- ----------------- -----------------
12 EARNINGS PER SHARE
Basic earnings per share ("EPS") is calculated by dividing the
profit for the year attributable to ordinary equity holders of the
Parent Company (the "Earnings") by the weighted average number of
Ordinary Shares outstanding during the year, less the weighted
average number of own shares held. Own shares are held in Employee
Benefit Trusts ("EBTs").
Diluted EPS includes an adjustment to reflect the dilutive
impact of share awards.
The number of shares to be issued under the Restricted Share
Units is based on the Impax NH assets under management at the
vesting date. Assets under management are currently below the
threshold for shares to be issued so the RSUs are currently not
dilutive. The put and call arrangement to acquire Impax NH
management shares is also currently not dilutive.
Earnings
for the
year Shares Earnings
GBP000 000s per share
-------- -------- ------- ----------
2020
Basic 13,235 124,572 10.6p
-------- -------- ------- ----------
Diluted 13,235 125,825 10.5p
-------- -------- ------- ----------
2019
-------- -------- ------- ----------
Basic 15,003 122,887 12.2p
-------- -------- ------- ----------
Diluted 15,003 124,056 12.1p
-------- -------- ------- ----------
Earnings are reduced by GBP503,000 for the year ended 30
September 2020 (2019: GBP867,000) to reflect holders of restricted
shares receiving dividends during the vesting period.
The weighted average number of shares is calculated as shown in
the table below:
2020 2019
000's 000's
---------------------------------------------------------- ------- -------
Weighted average issued share capital 130,415 130,415
Less own shares held not allocated to vested LTIP options (5,843) (7,528)
---------------------------------------------------------- ------- -------
Weighted average number of Ordinary Shares used in the
calculation of basic EPS 124,572 122,887
Additional dilutive shares regarding share schemes 2,451 2,800
Adjustment to reflect option exercise proceeds and future
service
from employees receiving share awards (1,198) (1,631)
---------------------------------------------------------- ------- -------
Weighted average number of Ordinary Shares used in the
calculation of diluted EPS 125,825 124,056
---------------------------------------------------------- ------- -------
The basic and diluted number of shares includes vested LTIP
option shares on the basis that these have an inconsequential
exercise price (1p or 0p).
13 DIVIDS
Dividends are recognised as a reduction in equity in the period
in which they are paid or in the case of final dividends when they
are approved by shareholders. The reduction in equity in the year
therefore comprises the prior year final dividend and the current
year interim.
Dividends declared/proposed in respect of the year
2020 2019
pence pence
------------------------------------ ------ ------
Interim dividend declared per share 1.8 1.5
Final dividend proposed per share 6.8 4.0
------------------------------------ ------ ------
Total 8.6 5.5
------------------------------------ ------ ------
The proposed final dividend of 6.8p will be submitted for formal
approval at the Annual General Meeting to be held on 18 March 2021.
Based on the number of shares in issue at the date of this report
and excluding own shares held the total amount payable for the
final dividend would be GBP8,838,000.
Dividends paid in the year
2020 2019
GBP000 GBP000
--------------------------------------- ------- -------
Prior year final dividend - 4.0p, 3.0p 5,140 3,864
Interim dividend - 1.8p, 1.5p 2,302 1,928
--------------------------------------- ------- -------
7,442 5,792
--------------------------------------- ------- -------
14 GOODWILL
The goodwill balance within the Group at 30 September 2020 arose
from the acquisition of Impax Capital Limited on 18 June 2001
(Listed Equity and Private Equity operating segment) and the
acquisition of Impax NH in January 2018.
Goodwill
GBP000
--------------------- --------
Cost
At 1 October 2018 12,171
Foreign exchange 633
--------------------- --------
At 30 September 2019 12,804
--------------------- --------
Foreign exchange (498)
--------------------- --------
At 30 September 2020 12,306
--------------------- --------
Impax NH consists of only one cash-generating unit ("CGU").
Goodwill is allocated between CGUs at 30 September 2020 as follows
- GBP10,677,000 to Impax NH and GBP1,629,000 to the Listed Equity
and Private Equity CGU's.
The Group has determined the recoverable amount of its CGUs by
calculating their value in use using a discounted cash flow model.
The cash flow forecasts were derived taking into account the budget
for the year ended 30 September 2021, which was approved by the
Directors in October 2020.
The goodwill on the Listed Equity and Private Equity CGUs arose
over 15 years ago and the business has grown significantly in size
and profitability since that date. There is accordingly significant
headroom before an impairment is required. The main assumptions
used to calculate the cash flows in the impairment test for these
CGUs were that asset under management would continue at current
levels and margins would continue at current levels, that fund
performance for the Listed Equity business would be 5 per cent per
year and a discount rate of 12.5 per cent. The discount rate was
derived from the Group's weighted average cost of capital. There
has been no impairment of goodwill related to these segments to
date and there would have to be significant asset outflows over a
sustained period before any impairment was required. If the
discount rate increased by 3 per cent there would no impairment and
if fund performance reduced to zero there would be no
impairment.
The impairment test for the Impax NH CGU showed no impairment
was required and used the following key assumptions - average fund
inflows of $0.57bn, fund performance of 5 per cent, an average
operating margin of 20 per cent and a discount rate of 12.5 per
cent. Changes in the assumptions as follows would individually not
give rise to an impairment: a consistent ten per cent decrease in
inflows; a 100 basis point annual reduction in performance each
year; a 1 per cent annual reduction in operating margin, a 1 per
cent increase in discount rate.
15 INTANGIBLE ASSETS
Intangible assets mainly represents the value of the management
contracts acquired as part of the acquisition of Impax NH.
Management
contracts Software Total
GBP000 GBP000 GBP000
------------------------- ---------- -------- -------
Cost
As at 1 October 2018 27,381 418 27,799
Additions - 97 97
Foreign exchange 1,635 - 1,635
------------------------- ---------- -------- -------
As at 30 September 2019 29,016 515 29,531
Additions - 14 14
Foreign exchange (1,309) - (1,309)
------------------------- ---------- -------- -------
As at 30 September 2020 27,707 529 28,236
------------------------- ---------- -------- -------
Accumulated amortisation
As at 1 October 2018 1,890 344 2,234
Charge for the year 2,528 48 2,576
Foreign exchange 203 - 203
------------------------- ---------- -------- -------
As at 30 September 2019 4,621 392 5,013
Charge for the year 2,535 66 2,601
Foreign exchange (249) - (249)
------------------------- ---------- -------- -------
As at 30 September 2020 6,907 458 7,365
------------------------- ---------- -------- -------
Net book value
As at 30 September 2020 20,800 71 20,871
------------------------- ---------- -------- -------
As at 30 September 2019 24,395 123 24,518
------------------------- ---------- -------- -------
As at 30 September 2018 25,491 74 25,565
------------------------- ---------- -------- -------
16 PROPERTY, PLANT AND EQUIPMENT
Fixtures,
Right of Leasehold fittings
use assets improvements and equipment Total
GBP000 GBP000 GBP000 GBP000
------------------------------ ----------- ------------- -------------- -------
Cost
As at 1 October 2018 - 2,059 1,387 3,446
Additions - 11 294 305
Foreign exchange - 1 20 21
------------------------------ ----------- ------------- -------------- -------
As at 30 September 2019 - 2,071 1,701 3,772
Impact of adoption of IFRS 16 10,693 - - 10,693
As at 1 October 2019 10,693 2,071 1,701 14,465
Additions 87 22 146 255
Foreign exchange (225) - - (225)
------------------------------ ----------- ------------- -------------- -------
As at 30 September 2020 10,555 2,093 1,847 14,495
------------------------------ ----------- ------------- -------------- -------
Accumulated depreciation
As at 1 October 2018 - 827 783 1,610
Charge for the year - 143 231 374
Foreign exchange - - 9 9
------------------------------ ----------- ------------- -------------- -------
As at 30 September 2019 - 970 1,023 1,993
Charge for the year 1,249 146 264 1,659
Foreign exchange (9) 2 (7) (14)
------------------------------ ----------- ------------- -------------- -------
As at 30 September 2020 1,240 1,118 1,280 3,638
------------------------------ ----------- ------------- -------------- -------
Net book value
As at 30 September 2020 9,315 975 567 10,857
------------------------------ ----------- ------------- -------------- -------
As at 1 October 2019 10,693 1,101 678 12,472
------------------------------ ----------- ------------- -------------- -------
As at 30 September 2018 - 1,232 604 1,836
------------------------------ ----------- ------------- -------------- -------
Lease arrangements
The Group has adopted IFRS 16 for the first time in these
financial statements. Property, plant and equipment therefore
includes right-of-use assets in relation to operating leases for
the Group's office buildings.
The carrying value of the Group's right of use assets,
associated lease liabilities and the movements during the period
are set out below.
Right of
use asset Lease liabilities
GBPm GBPm
-------------------------- ----------- -----------------
At 1 October 2019 10,693 11,991
New leases 87 87
Lease payments - (1,700)
Interest expense - 514
Depreciation charge (1,249) -
Foreign exchange movement (216) (221)
-------------------------- ----------- -----------------
At 30 September 2020 9,315 10,671
-------------------------- ----------- -----------------
Current 1,410
Non-current 9,261
----------- -----------------
10,671
-------------------------- ----------- -----------------
All contracts existing at the date of the initial application of
IFRS 16 have been captured and recognised under IFRS 16.
The contractual maturities on the undiscounted minimum lease
payments under lease liabilities are provided below along with a
reconciliation to the lease liability recognised at 1 October
2019:
2020 2019
GBP000 GBP000
--------------------------------------------- ------- -------
Within one year 1,702 1,710
Between 1 and 5 years 6,461 6,568
Later than 5 years 4,862 6,655
--------------------------------------------- ------- -------
Total undiscounted lease liabilities 13,025 14,933
--------------------------------------------- ------- -------
Impact of discounting (2,936)
--------------------------------------------- ------- -------
Recognition exemption for short term leases (6)
--------------------------------------------- ------- -------
Lease liability recognised at 1 October 2019 11,991
--------------------------------------------- ------- -------
The Company's London office lease has an extension option of a
further five years from June 2027, subject to a rent review, which
are not included in the above numbers on the basis that it is not
yet reasonably certain that it will be exercised.
17 TRADE AND OTHER RECEIVABLES
2020 2019
GBP000 GBP000
------------------------------- ------- -------
Trade receivables 3,512 2,412
Other receivables 685 1,479
Prepayments and accrued income 16,538 12,849
------------------------------- ------- -------
20,735 16,740
------------------------------- ------- -------
18 CURRENT ASSET INVESTMENTS
The Group makes seed investments into its own Listed Equity
funds and also invests in its Private Equity funds. Where the funds
are consolidated the underlying investments are shown in the table
below. Investments made are shown below.
Total
GBP000
--------------------- -------
At 1 October 2018 4,349
Additions 2,522
Fair value movements (155)
Fund deconsolidation (53)
Repayments/disposals (2,037)
--------------------- -------
At 30 September 2019 4,626
Additions 758
Fair value movements 952
Repayments/disposals (1,949)
--------------------- -------
At 30 September 2020 4,387
--------------------- -------
19 CASH AND CASH EQUIVALENTS, CASH INVESTED IN MONEY MARKET
FUNDS AND LONG-TERM DEPOSITS
Cash and cash equivalents under IFRS does not include deposits
in money market funds or cash held in deposits with an original
maturity of more than three months. However the Group considers its
total cash reserves to include these amounts. Cash held in Research
Payment Accounts ("RPAs") is collected from funds managed by the
Group and can only be used towards the cost of researching stocks.
A liability of an equal amount is included in trade and other
payables. This cash is also excluded from cash reserves. A
reconciliation is shown below:
2020 2019
GBP000 GBP000
---------------------------------------------------------- ------- -------
Cash and cash equivalents 20,245 11,939
Cash invested in money market funds and long-term deposit
accounts 18,516 15,235
Less: cash held in RPAs (1,363) (968)
---------------------------------------------------------- ------- -------
Cash reserves 37,398 26,206
---------------------------------------------------------- ------- -------
The Group is exposed to interest rate risk on the above balances
as interest income fluctuates according to the prevailing interest
rates. The average interest rate on the cash balances during the
year was 0.3 per cent (2019: 0.3 per cent). A 0.1 per cent increase
in interest rates would have increased Group profit after tax by
GBP32,000. An equal change in the opposite direction would have
decreased profit after tax by GBP32,000.
The credit risk regarding cash balances of the operating
entities of the Group is spread by holding parts of the balance
with RBS International, Lloyds Bank, Citizens Financial Group (all
with Standard & Poor's credit rating A-2) and the Bank of New
Hampshire (unrated) with the remainder in money market funds
managed by BlackRock and Goldman Sachs (both with a Standard &
Poor's credit rating of AAA).
20 TRADE AND OTHER PAYABLES
2020 2019
GBP000 GBP000
----------------------------------- ------- -------
Trade payables 305 2,231
Taxation and other social security 3,285 2,454
Other payables 4,550 4,050
Accruals and deferred income 19,844 14,846
----------------------------------- ------- -------
27,984 23,581
----------------------------------- ------- -------
The most significant accrual at the year-end relates to variable
staff remuneration.
21 LOANS
To part fund the acquisition of Impax NH the Group signed a debt
facility with RBS. The facility consisted of a US$13 million term
loan repayable annually over a three year term and a US$13 million
revolving credit facility ("RCF") with a five year tenor. The term
loan incurred interest at US LIBOR plus 2.9 per cent and the
revolving credit facility at US LIBOR plus 3.3 per cent. On
completion of the acquisition the Group drew down the term loan in
full and US$12 million of the revolving credit facility. During
2018 the RCF was repaid in full, but remains available. During 2019
the term loan was repaid in full.
A reconciliation of the movement on the loan is provided
below
2020 2019
GBP000 GBP000
------------------------- ------- --------
At beginning of the year - 9,978
Repayments - (10,371)
Foreign exchange - 393
At end of the year - -
------------------------- ------- --------
22 ORDINARY SHARES
2020 2019 2020 2019
Issued and fully paid No of shares/000s No of shares/000s GBP000 GBP000
------------------------------ ------------------ ------------------ ------- -------
At 1 October and 30 September 130,415 130,415 1,304 1,304
------------------------------ ------------------ ------------------ ------- -------
23 OWN SHARES
No of Shares/000s GBP000
------------------------------------------------- ----------------- -------
At 1 October 2018 9,724,146 5,420
Satisfaction of option exercises and RSS vesting (1,879,770) (1,047)
EBT purchases 1,181,390 2,505
------------------------------------------------- ----------------- -------
At 30 September 2019 9,025,766 6,878
Satisfaction of option exercises and RSS vesting (5,105,507) (3,891)
EBT purchases 1,266,608 4,223
------------------------------------------------- ----------------- -------
At 30 September 2020 5,186,867 7,210
------------------------------------------------- ----------------- -------
Included within Own Shares are 4,747,723 shares held in a
nominee account in respect of the Restricted Share Scheme.
24 FINANCIAL COMMITMENTS
At 30 September 2020 the Group has outstanding commitments to
invest up to the following amounts into private equity funds that
it manages.
-- EUR203,000 (2019: EUR203,000) into Impax New Energy Investors
LP; this amount could be called on in the period to 31 December
2020;
-- EUR113,000 (2019: EUR113,000) into Impax New Energy Investors
II LP; this amount could be called on in the period to 22 March
2021; and
-- EUR2,137,000 into Impax New Energy Investors III LP (2019:
EUR2,994,000); this amount could be called on in the period to 31
December 2026.
The Group has initially acquired an ca. 83.3 per cent interest
of Impax NH's share capital. Impax NH's management and staff
shareholders (the "Management Shareholders"), representing the
remaining ca.16.7 per cent of Impax NH's issued share capital will
retain their shareholding until 2021 when if either Impax or the
Management Shareholders exercise a put and call option arrangement,
the Group will acquire their entire holding for US$8.3 million and
up to $6.3 million of Contingent Consideration. This would be paid
in 2021 in Impax equity and/or cash, as the Group elects.
Contingent Consideration may also be payable to the sellers of
the 83.3 per cent stake. This will be determined based on Impax
NH's average AUM as at 30 June 2020, 30 September 2020 and 31
December 2020 and will rise linearly from zero, if Impax NH's
average AUM is not more than US$5.5 billion, to US$37.5 million for
the entire share capital of Impax NH, if Impax NH's average AUM is
$8 billion or above.
Given the actual AUM at 30 June 2020 and 30 September 2020 and
the projected AUM at 31 December 2020 we have estimated that no
Contingent Consideration will be payable.
25 RECONCILIATION OF PROFIT BEFORE TAX TO CASH GENERATED FROM
OPERATIONS
This note should be read in conjunction with the Consolidated
cashflow statement. It provides a reconciliation to show how profit
before tax, which is based on accounting rules, translates to
cashflows.
2020 2019
GBP000 GBP000
-------------------------------------------------------------- ------- -------
Profit before taxation 16,682 18,898
Adjustments for income statement non-cash charges and
finance income/expense:
Depreciation of property plant and equipment and amortisation
of intangible assets 4,260 2,952
Finance income (1,020) (1,055)
Finance expense 1,921 1,125
Share-based payment charges 1,813 1,160
Non-controlling interest - (156)
Contingent Consideration credit - (3,543)
Adjustments for statement of financial position movements:
Increase in trade and other receivables (3,995) (1,135)
Increase in trade and other payables 4,721 2,602
-------------------------------------------------------------- ------- -------
Cash generated from operations 24,382 20,848
-------------------------------------------------------------- ------- -------
26 NEW ACCOUNTING STANDARDS
New standards, interpretations and amendments adopted during the
year
IFRS 16 Leases
The Group has applied IFRS 16 for the first time for its annual
reporting period commencing on 1 October 2019. IFRS 16 replaces IAS
17 Leases and is effective for reporting periods beginning on or
after 1 January 2019.
Where the Group is a lessee, IFRS 16 requires operating leases
to be recorded in the Group's statement of financial position,
reflecting a lease liability and an associated right-of-use ("ROU")
asset. The lease liability is initially measured at the present
value of the future contractual cash flows remaining under the
lease term, discounted using the Group's incremental borrowing
rate. Interest is subsequently accrued on the lease liability and
presented as a component of finance costs, and calculated using the
effective interest method to give a constant rate of return over
the life of the lease whilst the liability is reduced by the lease
payments. The ROU asset is initially measured at the amount of the
lease liability plus initial direct costs incurred by the lessee,
adjusted for any lease incentives and the estimated cost of
restoration obligations. The ROU asset is presented within
property, plant and equipment and depreciated over the lease term
as the benefit of the lease is consumed. The Group applies
judgement in assessing whether to include options to extend or
cancel the lease. All relevant factors that could create an
economic incentive to exercise the option are considered and the
option is included if it is reasonably certain to be exercised.
After the lease commencement date, the Group reassesses the lease
term if there is a significant change in circumstances that is
within its control and affects the likelihood that it will exercise
(or not exercise) the option.
The Group has measured the IFRS 16 ROU assets and lease
liabilities as if the standard had always been applied but based on
an incremental borrowing rate at the date of initial adoption, 1
October 2019. Comparative information has not been restated as the
Group has applied the modified retrospective approach with the
cumulative effect of initially applying the standard recognised as
an adjustment to the opening retained earnings at 1 October 2019.
The Group has applied the optional exemption in the standard which
permits the cost of short-term (less than 12 months) leases to be
expensed on a straight-line basis over the lease term. These lease
arrangements are not material to the Group.
As a result of applying IFRS 16, the Group has recognised lease
liabilities and ROU assets at 1 October 2019 of GBP11,991k and
GBP10,693k respectively in respect of leases over its office
buildings. The Group has also eliminated the accrual of GBP1,051k
previously required to straight line lease charges over the lease
life. These adjustments have reduced the Group's net assets by
GBP247k which is recorded as a reduction in retained earnings at 1
October 2019. The weighted average incremental borrowing rate
applied to the lease liabilities on 1 October 2019 was 4.76 per
cent.
New Standards and Interpretations not yet adopted
There were no other Standards or Interpretations that were in
issue and required to be adopted by the Group as at the date of
authorisation of these consolidated financial statements. No other
Standards or Interpretations have been issued that are expected to
have a material impact on the Group's financial statements.
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END
FR UUAARRKUURUA
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